Under the new contract, Brookes will continue in his role as Myer's CEO beyond the previously advised conclusion of his contract in August 2014.

Brookes said he was pleased to be able to continue in his role and would be interested in leading a merged Myer-David Jones.

"Should a transaction to merge Myer and David Jones be successfully completed, I can commit to presenting myself as a potential chief executive for the merged entity," he said in a statement.

Myer chairman Paul McClintock said he had written an open letter again to David Jones chairman Peter Mason to call on the David Jones board to engage in discussions on a potential merger between the two department store chains.

"In order to provide leadership clarity at Myer, the board has taken the view that ceasing the CEO search at this preliminary phase and reconfirming Bernie is in the best interests of Myer and its shareholders," McClintock said in a statement.

"While we have made clear the selection of the CEO for any future merged entity would be a shared decision by both companies, Bernie's reappointment provides us with at least one option for that role."

McClintock said Myer hopes that David Jones may come to a view that the merger of the two firms would be in the interest of both companies' shareholders.

"We look forward to the opportunity to meet with David Jones in the future to discuss these matters," he said.